Litigation Release No. 19074 / February 10, 2005

Accounting and Auditing Enforcement
Release No. 2188

SEC v. Reza Mikailli, et al., Case No. 02-2426 SI (N.D. Cal.)

District Judge Susan Illston in San Francisco entered judgment on February 9 against former Unify Corporation chief executive Gholamreza Mikailli. The judgment includes an injunction against future violations of the securities laws and a bar against serving as a director or officer of any public company.

In 2003, a federal jury convicted Mikailli of criminal violations of Section 10(b), Rule 10b-5 and conspiracy. On September 24, 2004, Mikailli was sentenced to serve 51 months in prison and pay restitution and penalties totaling $1,001,000.

The Commission's complaint, filed in May 2002, alleged that Mikailli caused Unify to fraudulently overstate revenue on software sales transactions that they were subject to contingencies or involved barter transactions. The Commission alleged that Unify overstated its revenue over four fiscal quarters in amounts ranging from 61% to 150% per quarter. The Commission also alleged that Mikailli sold shares of Unify stock at inflated prices during the fraud. Mikailli consented to entry of judgment in the Commission's case without admitting or denying those allegations.

The Commission's action against Mikailli alleged violations of Sections 10(b), 13(b)(5) and 16(a) of the Securities Exchange Act of 1934 and Rules 10b-5, 13b2-1, 13b2-2 and 16a-3 and aiding and abetting violations of Sections 13(a) and 13(b)(2)(A) of the Exchange Act and Rules 12b-20 and 13a-13.